RATES OF Treasury bills (T-bills) on offer on Monday will likely move sideways or slightly lower ahead of the release of full-year gross domestic product (GDP) data on Thursday.

The Bureau of the Treasury (BTr) is looking to borrow P20 billion via the T-bills on Monday: P5 billion each from the three-month and six-month debt papers and P10 billion via the one-year securities.

Bond traders said the yields on the short-term bills will likely move sideways or drop by 5 basis points (bps) ahead of data on the economy’s performance last year.

“I think it should move sideways to 5 bps lower from the previous auction ahead of the release of the country’s full-year 2020 GDP print,” a bond trader said on Friday via Viber.

A BusinessWorld poll of 18 economists and one institution last week yielded a median estimate of a 8.5% GDP contraction for the fourth quarter and a steeper slump of 9.5% for full-year 2020.

If realized, the fourth-quarter forecast would be better than the 11.5% slump in the previous three-month period and the record 16.9% plunge in the second quarter. It would also match the worse end of the 8.5-9.5% decline expected by economic managers.

“Investor demand for T-bills is expected to persist as the market remains abundant with liquidity given the dearth of investment outlets amid risk aversion,” the first trader added.

A second bond trader sees T-bill yields moving the same way at today’s auction and said “banks aim to place their excess liquidity there and as demand for local government securities remains at the short end.”

The Treasury last week upsized the volume of T-bills it awarded to P22 billion from the P20-billion program as total tenders reached P87.11 billion.

Broken down, the BTr raised P5 billion as planned via the 91-day debt papers from P17.76 billion in bids. The three-month T-bills fetched an average rate of 0.984%, inching up by 0.7 bp from the 0.977% in the Jan. 11 auction.

Meanwhile, it borrowed P7 billion via the 182-day T-bills, higher than the P5-billion program, with the Treasury accepting more bids from the non-competitive sector as tenders hit P24.296 billion. The six-month papers were quoted at an average rate of 1.348%, down 1.2 bps from 1.36% previously.

For the 364-day securities, the government awarded P10 billion as planned from tenders worth P45.055 billion. The average rate of the one-year instruments also went down by 2.3 bps to 1.582% from the previous rate of 1.605%.

At the secondary market on Friday, the three-month, six-month and one-year T-bills were quoted at 1.165%, 1.36% and 1.596%, respectively, based on the PHP BVAL Reference Rates posted on Philippine Dealing System’s website.

The Treasury plans to borrow P140 billion from the local debt market this month: P80 billion via weekly auctions of T-bills and P60 billion from fortnightly Treasury bond offerings.

The government aims to raise P3 trillion this year from local and foreign sources to fund its budget deficit that is seen reaching 8.9% of GDP. — Beatrice M. Laforga